At least 10 of the 30 components of the Dow Jones industrial average gained 2 points or more to help power the blue chip index to a 1.4% gain and a leading position within Thursday's broad market rebound.
X The Dow Jones industrial average gained 3.8% in November, raising its year-to-date advance to 22.8%.
Meanwhile, innovative new discount retailer Five Below (FIVE) rushed more than 3% higher in extended hours trading after announcing sparkling fiscal third-quarter results with earnings up 80% to 18 cents a share, crushing the 13-cent consensus view. Net margin shot 110 basis points higher to 3.8%.
Revenue jumped 29% to $257.2 million, also beating views. In the prior four quarters, Five Below's revenue rose 18%, 19%, 21% and 29% vs. year- ago levels.
The Dow Jones industrial average jumped as much as 1.6% and notched an all-time high of 24,327, breaking past 24,000 for the first time. At 24,272, the 30-stock Dow is now up almost 23% year to date.
The Nasdaq composite recouped much of Wednesday's 1.3% drop, rising 0.7%. The Nasdaq 100, which tracks the 100 largest nonfinancial companies in the all-electronic exchange, rebounded nearly 0.8%. The S&P 500 also rallied 0.8%. Volume zoomed higher on the NYSE on a blast of turnover in the final minutes and was virtually even on the Nasdaq.
The Nasdaq composite rose 2.2% in November and is up 23.1% since Jan. 1, vs. a 2.8% monthly lift and a 18.3% year-to-date gain for the 500.
Five Below, the Sector Leader and highly rated member of IBD's discount and variety retail group had already become extended from a pair of proper buy points. At Thursday's close of 61.77, Five Below was up nearly 14% from a five-month cup base with a 54.23 buy point. The small cap firm is also up nearly 7% past a narrow flat base with a 57.75 entry.
Five Below's Retail-Discount & Variety industry group ranks 68th among 197 industry groups and subgroups rated each day for relative six-month price performance by IBD. In general, the biggest stock market winners hail from the top 20 to 40 industry groups. However, Five Below's group has jumped to its current spot from No. 102 four weeks ago, a good sign.
IBD's TAKE: Track the industry groups moving fast up the rankings by going to Data Tables in the Stock Lists section of Investors.com, then click on Industry Sub-Group Rankings. IBD research has found that up to 50% of a leading stock's move can be attributed to the strength of its industry group and broad industry sector.
Five Below is a relatively new public company, debuting in July 2012 at 17 a share. It has a very reasonable float of 54 million shares, easily meeting the criteria of S in IBD's CAN SLIM seven-point investment paradigm. The S stands for supply vs. demand.
Leaders In The Dow
Goldman Sachs (GS) led the way among Dow 30 stocks in terms of point gain, rising more than 6 points, or nearly 3%, to 247.64. At one point, shares moved past a 247.84 buy point in a nearly nine month saucer with handle.
Apple (AAPL), meanwhile, stretched its gains from an Oct. 27 breakout from a good cup with handle and a 160.97 buy point by rebounding 2.37, or 1.4%, to 171.85 in fast turnover. More than 40.1 million shares traded hands, 48% higher than usual.
The gain for Apple from latest correct buy point is now back to 6.7%. The iPhone giant has also risen 45% since marking a breakout from a bottoming base on Jan. 6-9. At that time, Apple also cleared a cup with handle, shoving past a 118.12 entry.
Back to Five Below, the Philadelphia-based company now operates more than 600 stores in 32 states. It has zero long-term debt and expanded its shareholders equity to $381 million vs. $288 million in the year-ago period.
Five Below also forecast sales of $491 million to $503 million for the January-ending fiscal fourth quarter, well above Wall Street's consensus estimate of $484.1 million. Executives also see earnings of $1.09 to $1.16 a share, or up 21% to 29%.
Five Below and peer Ollie's Bargain Outlet (OLLI) are the only two stocks in IBD's Retail-Discount & Variety industry group to earn a top-notch 99 Composite Rating, according to IBD Stock Checkup.
Transports Roll Higher, Again
Railroad giant CSX (CSX) gained more than 2%, rolling past a 55.09 entry in a 19-week flat base and is up nearly 9% for the week. Volume is heavy, running more than 60% above its usual pace. The RS line, drawn in blue on IBD's daily and weekly charts, is not at all-time highs but is rising sharply in recent weeks.
Norfolk Southern (NSC) joined the breakout train, rising nearly 2% in spirited volume and moving past a 134.62 buy point.
Both Norfolk and CSX have shown improved fundamentals, at least on a quarterly basis. The former has grown profit 9%, 15%, 26% and 13% vs. year-ago levels over the past four quarters, while the latter has seen EPS gains of 21%, 38%, 36% and 6%. CSX's profit, however, is seen dipping 2% to 57 cents a share, due in part to a tough year over year comparison.
The Dow Jones transports, up 3.3% and posting a closing high on Wednesday, ramped another 2.1% higher to all-time highs.
Apple, Big Winner In 2018 Too?
Back to Apple, the company has shown improving fundamentals over the past 12 months, and the Street appears confident that the turnaround will continue. Over the next two quarters, analysts on consensus see earnings growing 12% and 39%. That would extend Apple's streak of double-digit EPS growth to five straight quarters.
Revenue increases are helping drive those positive expectations.
In the fourth quarter of fiscal 2016, ended in September that year, Apple's sales slumped 9%. After that, revenue turned around, rising 3%, 5%, 7% and 12% in the next four quarters. Apple is now seen growing the top line 10% in the current first quarter (ending in December) to $86.18 billion, then another 30% to $68.77 billion in Q2 of fiscal 2018.
Strong orders for the ultra-luxury iPhone X, a major iPhone replacement cycle, strength in digital services, increasing popularity of the cellular-enabled Apple Watch, and other products are helping continue Apple's dominance in consumer electronics.
Apple's stock price strength also is improving. According to IBD Stock Checkup, the Relative Price Strength Rating is a respectable 80 on a scale of 1 (weak) to 99 (strong), up sharply since scoring a 59 on Jan. 1.
Meanwhile, Apple's EPS Rating has improved to a solid 90 (also on a scale of 1 to 99), up from 45 on Jan. 1. The SMR Rating, which analyzes sales growth, profit margins, and return on equity, is at a top-shelf A on a scale of A to E.
In the September-ended fiscal fourth quarter, Apple's aftertax margin rose 120 basis points to 20.4%, indicating strong pricing power of its products as well as likely hinting at improved operating leverage or cost efficiencies.
Chips Look Chipper
Semiconductor stocks are trying to rebound. Nvidia (NVDA), a leader in chips for artificial intelligence, data center, self-driving and virtual currency markets, is trying to stem its decline after briefly sliding through the 50-day moving average on Wednesday.
Shares gained 2%. The long-term uptrend is intact, and Nvidia still holds a 14% gain since clearing a narrow flat base with a a 174.66 buy point on Sept. 15.
Nvidia, an IBD 50 play at No. 10 and recently highlighted in IBD Sector Leaders, is facing tough year-over-year comparisons after posting large double-digit to triple-digit earnings gains since the second half of fiscal 2017, ended in January. Yet Wall Street still anticipates solid growth in the quarters ahead. Analysts on consensus forecast a 16% rise in January-ending Q4 profit to $1.15 a share on a 22% jump in sales to $2.66 billion, which would be a quarterly best.
Growth is expected to reaccelerate in Q1 of fiscal 2019, with earnings rising 24% to 98 cents a share on a 27% pickup in sales to $2.46 billion.
Lam Research (LRCX) and Applied Materials (AMAT), however, failed to hold on to early gains and fell mildly. Both are members of IBD Big Cap 20. Watch to see if they can recover their respective 50-day moving averages. Failure to do so would trigger a sell signal.
In other financial markets, investors trimmed more of their long-term government bond holdings ahead of a widely expected Federal Reserve hike in interest rates. The yield on the benchmark U.S. Treasury 10-year bond rose to 2.41%, the highest since late October.
Despite elevated crude oil prices in recent months, transport stocks continued to thrive. This may come as no surprise given the acceleration of the U.S. economy, which rose at a revised 3.3% annualized rate in the third quarter. Meanwhile, Chinese manufacturing output data came in stronger than expected.
In addition to the Senate's vote on a major tax reform bill that could sharply reduce corporate taxes, Wall Street will focus on the ISM manufacturing survey for November, due Friday at 10 a.m. ET.
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